There are many ways you can live your life. Some people prefer to become a doctor and serve the society. Some become an engineer and start working hard for reputed companies in the world. But there are some smart individuals who pursue their career as a trader. It’s not easy to become a successful trader in the Forex market. In fact, it is one of the most arduous tasks in the world. If you analyze the success rate of retail traders, you will be surprised to learn only 5% of the traders are able to make a decent living out of trading. But this doesn’t necessarily mean you will lose money. In fact, trading can be one of the easiest professions in the world, provided that you understand the nature of this business.
The professional Forex trader always follows a simple trading technique to find good trades. Instead of relying on the indicators, they use some powerful tools which help them to find the best trades. Let’s learn about the three most powerful tools used by experienced traders.
Trend line tools
We all know the trend trading strategy is one of the best ways to find great trades. There is saying in Forex market, “The trend is your friend”. So, if you intend to become a successful trader you must learn to trade the market with the trend. The experienced traders in Singapore use simple trend line tools available in their robust trading platform SaxoTraderGo to filter out the best potential trading spots. Learning the proper use of trend line tools is really easy but the majority of the rookie traders still lose money. The only reason behind their losing trades is the lower time frame. You can’t identify the long term market trend in the lower time frame. You need to use the daily or weekly time frame to find the best trading spots using the trend line trading strategy.
Fibonacci retracement tools
The experienced traders in the exchange traded funds industry manage to ride the long term market trend by using the Fibonacci retracement tool. Those who are new to the trading business, might not understand the importance of Fibonacci retracement tools. It allows the traders to find the end point of market retracement. Sounds a little bit confusing? Let’s make it clear. In an uptrend, the market will never exhibit bullish movement. At times you will find small bearish movement which is often known as a minor bearish retracement. The experienced traders use the Fibonacci retracement tools to find out the exact entry point based on the market retracement. Though there are many retracement levels, you need to use the 50% and 61.8% retracement level.
Relative Strength Index
Very few people actually know the proper use of indicators. The rookie traders always make things a mess by using too many indicators. Unlike them, the experienced traders use one or two indicators and execute a trade with proper logic. Though there are many indicators out there in the market, the pro traders prefer to use the RSI indicators. RSI indicators allow the retail traders to find the overbought and oversold condition of the currency pairs. The pro traders use the reading in the higher time frame to filter out the best trades. Understanding the RSI reading is very easy but using it in real life trading is a little complex. You can’t expect to have great results in trading when you use it the lower time frame. To be precise, these indicators work best for the position trader.
Trading is all about precision. No matter which method you use, you will always have to lose money. This is where risk management policy comes into action. You might learn the proper use of these three tools and find great trades, still, you need to follow the conservative trading technique. Last but not least, never trade with more than 2% risk in each trade.